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Australian Personal
Property Securities Law
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Australian Personal
Property
Securities Law
Anthony Duggan
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Honourable Frank Iacobucci Chair in Capital Markets Regulation
Faculty of Law, University of Toronto
David Brown
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Associate Professor
Co-Director, Bankruptcy and Insolvency Law Scholarship
Unit (BILS) Adelaide Law School University of Adelaide,
Professorial Fellow, Melbourne Law School
LexisNexis Butterworths
Australia
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ARGENTINA
AUSTRIA
BRAZIL
CANADA
CHILE
CHINA
CZECH REPUBLIC
FRANCE
GERMANY
HONG KONG
HUNGARY
INDIA
ITALY
JAPAN
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POLAND
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AUSTRALIA
National Library of Australia Cataloguing-in-Publication entry
Duggan A.J.
Australian personal property securities law.
1st edition.
9780409330328 (pbk).
9780409330335 (ebk).
Includes index.
Security law — Australia. Personal property — Australia
Brown, David.
346.940666
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Author:
Title:
Edition:
ISBN:
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Notes:
Subjects:
Other Authors/Contributors:
Dewey Number:
ht
© 2012 Reed International Books Australia Pty Limited trading as LexisNexis.
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Foreword
Roy Goode
Oxford
28 July 2012
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The modern law of secured transactions in personal property began, as one would expect, in the
United States with the appearance, some 60 years ago, of Article 9 of the Uniform Commercial Code.
This was the first formulation of principles and rules to adopt a unitary concept of “security interest”
based on function rather than form and abolishing the distinction between security in the traditional
sense and title-retention devices serving a security purpose. Brilliant in its conception it became
adopted throughout the United States and was imported into Canada in the shape of Personal
Property Security Acts, similar legislation being adopted by New Zealand in 1999 and Australia a
decade later. New Zealand had the advantage of being a unitary jurisdiction, whereas the other three
countries had to produce legislation that would replace a myriad of State or Provincial laws.
Each jurisdiction, though following the Article 9 template, has reworked the text to fit its
own conditions, an unsurprising development given that the amount of detail now loaded into
Article 9 has made it almost impenetrable for all but the specialist. If Article 9 is unrivalled for its
complexity, the Australian PPSA is unmatched for its length, running to an amazing 343 sections,
incorporating numerous amendments since it was first enacted. The adoption of the Act is in no
small measure due to the dogged and Herculean efforts of the late Professor David Allan, who alas
did not live to see the culmination of his endeavours.
Faced with such a massive piece of legislation practising lawyers, banks and others involved
with personal property security will find themselves in need of an up-to-date fully comprehensive
guide through the statutory provisions. Happily one is at hand. Australian Personal Property
Securities Law, available in both book and electronic form, is a work of astonishing erudition.
Written by two outstanding scholars, Professors Anthony Duggan, of the University of Toronto
Faculty of Law, and David Brown of the University of Adelaide Law School, it takes the reader step
by step through what are often complex, and sometimes controversial, provisions, noting significant
departures from comparable legislation elsewhere and combining rigorous legal analysis with a
deep understanding of secured transactions practice and of the economic rationale of personal
property security. Instead of plunging the reader straight into an examination of the Act the book
takes time to explain the pre-Act state of the law and the forms of security then in use, following
the example of Grant Gilmore in his great two-volume work Security Interests in Personal Property.
The two authors are equally at home with the New Zealand and Canadian legislation, which
enables them to identify all the more readily the strengths and weaknesses of the Australian
PPSA. Replete with helpful examples this work, in explaining the statutory provisions with great
clarity, addresses typical problems and offers practical solutions. In short, it is a book which caters
equally for the needs of the scholar and the practising lawyer. It is an indispensable vade mecum
for those involved or interested in the subject and I have no doubt that it will enjoy great success.
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Contents
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Foreword
Preface
Table of Cases
Table of Statutes
Introduction
1
Chapter 2
Personal Property and its Classifications
Chapter 3
The Scope of the Statute
Chapter 4
Attachment and Writing Requirements
Chapter 5
Perfection
Chapter 6
Registration
Chapter 7
The Default Priority Rules
Chapter 8
Purchase Money Security Interests
161
Chapter 9
Accessions, Commingled Goods, and Crops
181
Chapter 10
Transfers of Collateral
193
Chapter 11
Proceeds
21
43
75
95
113
145
235
Enforcement of Security Interests
255
Insolvency Law and the PPSA
289
Conflict of Laws
305
Chapter 15
Transitional Matters
329
Chapter 16
International Developments
351
Chapter 12
Chapter 13
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Chapter 1
Conclusion
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Chapter 17
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Index
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Introduction
Introduction
Secured and Unsecured Credit
Unsecured credit
Secured credit
The function of security
Pre-PPSA Categories and Forms of Security Interest
Consensual and non-consensual security interests
Two-party transactions and three-party transactions
Real and personal property securities
Possessory and non-possessory security interests
Mortgages and hypothecations
Legal and equitable security interests
Transfer-based security interests and title retention arrangements
Fixed and floating security interests
The History of the Australian PPS Reforms
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Chapter 1
Personal Property and Its Classifications
Introduction
Goods
Financial Property
Introduction
Chattel paper
Currency
Documents of title
Investment instruments
Negotiable instruments
Intermediated Security
Intangible Property
Introduction
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Foreword
Preface
Table of Cases
Table of Statutes
1
1
1
1
2
3
4
4
4
5
5
6
7
9
12
14
21
21
22
24
24
24
25
26
26
27
28
30
30
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Attachment and Writing Requirements
Introduction
General Rules About Security Agreements
Security agreement
After-acquired property
Future advances
Enforcement expenses
Attachment
Introduction
Agreement
Value
Rights in the collateral
Postponement of attachment
The Writing Requirement
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Chapter 4
43
43
44
44
44
46
47
48
49
51
52
52
54
55
58
58
58
59
60
62
67
68
71
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The Scope of the Statute
Introduction
The Substance Test
Introduction
Title retention arrangements
Consignments
Trusts
Flawed asset arrangements
Other cases
The interpretation function
Deemed Security Interests
Accounts and chattel paper
Consignments
PPS leases
Exceptions
Licences
Subordination agreements
Bills of lading
Security interests arising by operation of law
Set-off
Land dealings
Insurance contracts and annuities
The QuIstclose trust
Other exclusions
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Chapter 3
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32
33
34
39
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Accounts
ADI accounts
Intellectual property
Licences
Commercial Property and Consumer Property
Inventory and Non-Inventory Personal Property
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75
76
76
77
77
77
78
78
79
82
83
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Perfection
Introduction
The Function of Perfection
Perfection By Possession
Introduction
Constructive possession
Goods possessed by bailee
Negotiable instruments
Electronic chattel paper
Investment instruments
Perfection By Registration
Perfection By Control
Introduction
ADI accounts
Intermediated securities
Investment instruments
Uncertificated negotiable instruments and letter of credit rights
Temporary Perfection
Loss and Continuity of Perfection
Access To Details of Security Agreement
Consequences of Failure To Perfect
95
95
97
98
98
99
99
101
101
102
103
103
103
103
104
105
107
108
109
110
111
Registration
Introduction
Pre-PPSA and PPSA Registration Compared
Introduction
Unification
Centralisation
Notice filing
Computerisation
Registration renewals
Searching The Register
Grantor’s name (grantor details) searches and serial number searches
Grantor’s details searches — individual grantor
Grantor’s detail searches — corporate grantor
Grantor’s details searches — other
Serial number searches — consumer property
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Chapter 5
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85
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Introduction
Writing
Signature
Collateral description
Implied references to intellectual property rights
Proceeds
Consequences of non-compliance
Floating Charges
.
Detailed Contents
113
113
113
113
113
115
117
120
120
121
121
123
126
127
128
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The Default Priority Rules
Introduction
The Section 55 Priority Rules
Competing perfected security interests
Reperfected security interests
Perfected security interest v unperfected security interest
Competing unperfected security interests
The irrelevance of notice
The Section 57 Priority Rules
Future Advances
Introduction
The law
Policy considerations
Subordination Agreements
Circular Priorities
The Double Grantor Rules
161
161
162
163
163
165
166
168
170
172
173
175
175
178
179
Accessions, Commingled Goods, and Crops
Introduction
Accessions
181
181
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145
145
145
148
149
149
150
152
153
153
153
154
155
156
158
Purchase Money Security Interests
Introduction
Policy Considerations
The Meaning of ‘Purchase Money Security Interest’
Seller PMSIs and lender PMSIs
Exceptions
Mixed PMSIs and non-PMSIs
Allocation of payments
Refinancings and consolidations
PPS leases
Requirements For Super-Priority
Competing PMSIs
PMSI in Accounts As Proceeds
Subordination Agreements
Security Interests in Crops and Livestock
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Chapter 7
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130
130
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135
140
140
141
143
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Serial number searches — commercial property
Restrictions on access to the register
Follow-up inquiries
Registering A Financing Statement
The mechanics of registration
Registration errors
Registration Amendments
General
Transfer of collateral
Change in grantor’s details and other particulars
.
Australian Personal Property Securities Law
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Proceeds
Introduction
The Pre-PPSA Position
The Meaning of Proceeds
Introduction
Second and subsequent generation proceeds
The dealing requirement
The grantor’s interest limitation
Identifiable or traceable personal property
Attachment of Security Interest to Proceeds
Introduction
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Chapter 11
193
193
195
197
197
199
203
212
214
217
218
221
221
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Transfers of Collateral
Introduction
Unperfected Security Interests
Perfected Security Interests
Serial-numbered collateral
Special rules for motor vehicles
Sale or lease in the ordinary course of business
Low value transactions
Interface with other laws
Currency
Investment instruments and intermediated securities
Temporarily perfected security interests
Subrogation
Creditor Payments, Negotiable Instruments,
Chattel Paper, and Negotiable Documents of Title
Creditor payments
Negotiable instruments
Chattel paper
Negotiable documents of title
Returned and Repossessed Goods
Introduction
Returned goods – reattachment of security interest
Returned collateral – accounts and chattel paper
Priority of security interests in returned goods
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182
183
185
186
186
188
189
191
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Introduction
The meaning of ‘accession’
The priority rules
Removal of accession
Processed Or Commingled Goods
Introduction
Continuation and perfection of security interest
Priority between competing claims to end product
Crop Security Interests
.
Detailed Contents
222
222
223
224
228
229
229
229
231
232
235
235
235
237
237
238
238
239
240
245
245
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Enforcement of Security Interests
Introduction
Scope of PPSA Chapter 4
Deemed security interests
Goods located outside Australia
Investment instruments and intermediated securities
Consumer transactions
Contracting out
Receivers
Security interests in personal property and land
General Rules
Commercially reasonable manner
Limitation on secured party’s rights
Non-merger
Cumulative rights and remedies
Default
Notice requirements
Notice Before Enforcement
Seizure of Collateral
Introduction
Methods permitted by law
Apparent possession
Higher as is and lower-ranking secured parties
Disposal of Collateral
Timing of disposal
Notice before disposal
Methods of disposal
Statement of account following disposal
Purchaser’s title
Distribution of collateral disposal proceeds
Redemption and reinstatement
Retaining Collateral
The consequences of the remedy
Objections and related matters
Collection Rights
Introduction
255
255
257
257
259
259
259
261
262
263
264
264
265
266
267
267
267
268
268
268
268
269
270
271
271
271
273
275
276
276
278
279
280
280
281
281
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248
249
249
250
251
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Chapter 12
The secured party’s cumulative entitlements
Proprietary and personal claims
Perfection and Priorities
Introduction
Other methods of perfection
Priorities
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281
282
282
283
285
285
Chapter 13
Insolvency Law and the PPSA
Introduction
Insolvency and The Effect of Non-Perfection
Introduction
The PPSA Provisions
The Corporations Act provisions
Consequential Amendments to Corporations Act
Introduction
Circulating security interests
PPSA retention of title property
Possessory security interests
Personal Insolvency
289
289
290
290
290
294
296
296
297
300
302
303
Chapter 14
Conflict of Laws
Introduction
The Territorial Reach of The PPSA
The Scope of PPSA Part 7.2
Security Interest in Goods
The main rules
Relocation of goods
The destination of goods rule
The mobile goods rule
Security interests in ships
Security Interests in Intangible Property
The main rules
Intellectual property
ADI accounts
Relocation of grantor
Priority of security interest if no foreign register
Security Interests in Financial Property and Letter
of Credit Rights
Introduction
Validity rules
Perfection rules
Proceeds
Enforcement of Security Interests
305
305
306
307
310
310
312
313
315
317
317
317
318
319
320
321
322
322
323
325
325
327
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Notice requirements
Notification and non-notification transactions
Recourse and non-recourse arrangements
The account debtor’s rights
Crops and Livestock
Corporations Act 2001 (Cth) Part 5.2
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329
329
331
331
331
331
332
332
333
333
334
335
335
336
337
338
338
338
338
339
340
343
343
343
International Developments
Introduction
International Initiatives
ERBD Model Law on Secured Transactions
UNCITRAL legislative guide on secured transactions
UNIDROIT cape town convention on international interests
in mobile equipment
351
351
351
351
352
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Transitional Matters
Introduction
Initial Application of Act
Registration Commencement Time
Registration
Fixed and floating charges
Transitional Provisions
Introduction
Transitional security agreement
Transitional security interest
Enforceability
Attachment
Perfection
Perfection by possession
Enforcement of transitional security interests
Migrated Security Interests
Introduction
Migration time
Transitional registers
Perfection
Errors and deficiencies in migrated data
Priorities
Introduction
Transitional vs non-transitional security interests
Perfected transitional vs perfected non-transitional
security interests
Unperfected transitional vs unperfected non-transitional
security interests
Perfected security interest vs unperfected transitional
security interest
Disputes between competing perfected, or competing unperfected,
transitional security interests
Purchase money security interests
Control
Insolvency
Transfers of Collateral
Temporary perfection
Serial-numbered goods
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Chapter 15
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Chapter 16
344
344
345
345
346
347
348
349
349
349
354
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UN convention on the assignment of receivables in
international trade
UNIDROIT convention on intermediated securities
Recent National Initiatives
Pacific Islands
Vietnam
Jersey
United Kingdom
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Conclusion
361
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Chapter 17
356
357
358
358
358
359
359
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Detailed Contents
365
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Index
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